The morning news. [volume] (Savannah, Ga.) 1887-1900, 1887-12-31

panles have become possessed of
their surplus assets through issues of bonds,
stocks and payments of dividends. voted by
themselves, while the great creditor the
United States, finds itself substantially
without adequate security for the repay.
ment of its loans.
THE SINGLE EXCEPTION.
The single exception above referred to,
we desire, at the threshold of this portion
OF the report to indicate and emphasize.
We refer to the administration of the Union
Pacific Railway Company since the spring
OF 1854 In our Judgment it is fully and
entirely exonerated from the condemnation
to be passed on the transactions of
other roads and relating to other
periods. We are satisfied that this
administration has devoted itself honestly
and intelligently to the herculean task of
rescuing the Union Pacific railway from
the insolvency which threatened it at the
inception of its work that it has devoted
itself by rigid economy, by intelligent man
agement. and by an application of every
dollar OF the earning capacity of the system
to its Improvement ana bettermenU
to place that company on "a sound and en-
during financial foundation This effort
has been continued during the past year
with increased intelligence and vigor, and
we think it to be largely due to this admin
lstration that the United States to-day, in
our Judgment, holds the Union Pacific rail
way, and through the value which it de-
rlves as an integral part of the Union
Pacific system Gf protected by legislation)
full security for the repayment of its whole
debt of interest"
JAY GoULD'S ENTRY.
The purchase of controlling interest by
jay Gould in 1873, the subsequent increase
OF the capital stock to 200, 900 shares, the
Inauguration of the policy of constructing
branch lines in 1877, the events leading up
to the consolidation of the Union Pacific
and Kansas Central Pacific, and that con
solidation itself are detailed at great length
and visited with sweeping condemna-
ton. 1t ultimately resulted that
the consolidation worked no other
harm to the combined organization than ex-
cesslve capitalization, but in the opinion of
the commission this circumstance does not
Justify the methods followed in bringing
the consolidation about Tho financial op-
GRAFTON of the Central Pacific Railroad Com
pany and its branches are discussed at
great length, and various transactions of
Directors Stanford, Huntington, Hopkins
and Crocker, who are declared to have had
absolute control of its affairs, are gone into
with great minuteness. The construction
contract entered into with Charles Crocker
& Co. is criticised. 1t is asserted that the
profits arising therefrom were divided
among Stanford, Huntington, Hopkins and
Crocker, by whose votes they had been
awarded, and: I'm the opinion of the COM
mission the course pursued IN this respect is
wholly indefensible.
AGREEMENT OF THE COMPANY.
1.-The agreement of the company when it
received the munificent aid extended by the
United States was to repay the loan, and SO
much of the interest as had not been repaid
by transportation OF percentages of net
earnings at the expiration of thirty years
The course pursued by Stanford, Hunting
ton, Hopkins and Crocker was necessarily
absolutely destructive of any possible
security.
= 4 4 :
"The commission has made a diligent
effort to ascertain the actual cost of the con-
struction of the railroad to the Contract
and Finance Company (the corporation
which constructed section 1873 and Promon-
tory Point, and in which Stanford Hunt
ington, Hopkins and Crocker were substan-
tally the sole stockholders), and, in their
opinion, have arrived at con-
clusion which cannot be far
from the truth. An accurate answer
to this question would be shown from the
books of Charles Crocker & Co, and of the
Contract and Finance Company. These
books were not produced, and in the opinion
of the commission were purposely destroyed
by direction of Stanford, Huntington, Hop
kins and Crocker. The evidence on this
point appears to be conclusive"
HUNTINGToN's vERACITY.
The evidence of Mr.. Huntington before
the Wilson committee i'll 1873, to the effect
that his share of the profits of the construc-
s D..
81, ,000,00 of the stock Of the company, is
quoted, and the commission says he
must have known when testify
ing ''that his statement was not
true, inasmuch as Stanford has testified
that each of the parties in the interest re-
ceived Sl3, 900 of the stock of the com
pany as his share of the profits" In the
report is inserted table giving the cost of
the Central Pacific railroad, as that cor
poratlon exists to-day as determined by the
evidence before the commission and also the
consideration paid therefor in bonds,
stock and cash. From this
paid for the construction in cash S41 ,573,
719 AZ, in bonds $lS,713,000, in stock
$50, ,5S3, $40 %; total $40, ,S72,529 60. The
total cost Of the construction, as determined
by the commission, is $5S, ,30l ,S3l S5.
leaving surplus profts of $62, ,5i06 697 81, of
which $50, ,5S5, $40 % was in stocks and ST.
9S4, ,SS7 62 in bonds All of this considera =
ton was paid TO Stanford Huntington Hop
kins and Crocker, and was voted to them
selves by their own votes.
THE BRANCHES.
In the construction of the branch roads
the surplus profit above the cost of con-
structi0n is stated at S55 5,539, ,554. Refer
ence is made to the constant practice of
the directors of this company TO permit ex-
penditures of very large sums CT money
without the requiring Of sufficient vouchers
disclosing the purposes to which they were
applied" :" aud the report says: There is no
room for doubt that large portion Of
this money was used for the purpose OF in
fiuencing legislation and of preventing the
passage OF measures deemed to be hostile to
TO the interests Of the company, and for the
purpose of influencing elections. 1t is i'm
possible to read Mr.. Huntington's evidence
relating to these expenditures, and
especially extracts from the Cotton
letters, written by Mr.. Huntington himself,
without reaching the conclusion that large
sums of money were expended by Mr..
Huntington in his efforts TO defeat the pas
sage Of various bills pending in Congress.
If this vast amount of money had been ap-
piled TO legitimate purposes no motive tor
concealmcnt would exist. 1t must, there
fore. be assumed that the object was illegiti-
mate. and as Mr.. Huntingtons own state
ment and his letters establish conclusively
that moneys were used with reference to
the company's business in the departments
| at Washington and in Congress, the con-
clusion is inevitable that it was used for inn
proper purposes.
X Nh EXCUSE.